776 F.3d 1175 (10th Cir. 2015), 13-3277, Conagra Foods, Inc. v. Americold Logistics, LLC

Docket Nº:13-3277
Citation:776 F.3d 1175
Opinion Judge:MURPHY, Circuit Judge.
Party Name:CONAGRA FOODS, INC., formerly known as Conagra, Inc.; SWIFTECKRICH, INC., Plaintiffs - Appellants, and KRAFT FOODSERVICE, INC.; SAFEWAY, INC.; PHILLIPS CONNECTIONS, INC., doing business as Phillips Connections and Hanover, Inc., Plaintiffs, v. AMERICOLD LOGISTICS, LLC; AMERICOLD REALTY TRUST, Defendants - Appellees
Attorney:John M. Duggan (Deron A. Anliker and Andrew I. Spitsnogle, with him on the briefs), Duggan Shadwick Doerr & Kurlbaum LLC, Overland Park, Kansas, for Plaintiffs - Appellants. Michael D. Pospisil (John M. Edgar with him on the briefs), Edgar Law Firm LLC, Kansas City, Missouri, for Defendants - App...
Judge Panel:Before LUCERO, MURPHY, and McHUGH, Circuit Judges.
Case Date:January 27, 2015
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit
 
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Page 1175

776 F.3d 1175 (10th Cir. 2015)

CONAGRA FOODS, INC., formerly known as Conagra, Inc.; SWIFTECKRICH, INC., Plaintiffs - Appellants, and KRAFT FOODSERVICE, INC.; SAFEWAY, INC.; PHILLIPS CONNECTIONS, INC., doing business as Phillips Connections and Hanover, Inc., Plaintiffs,

v.

AMERICOLD LOGISTICS, LLC; AMERICOLD REALTY TRUST, Defendants - Appellees

No. 13-3277

United States Court of Appeals, Tenth Circuit

January 27, 2015

As Corrected April 10, 2015.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF KANSAS. (D.C. NO. 2:13-CV-02064-JWL-KGS).

John M. Duggan (Deron A. Anliker and Andrew I. Spitsnogle, with him on the briefs), Duggan Shadwick Doerr & Kurlbaum LLC, Overland Park, Kansas, for Plaintiffs - Appellants.

Michael D. Pospisil (John M. Edgar with him on the briefs), Edgar Law Firm LLC, Kansas City, Missouri, for Defendants - Appellees.

Before LUCERO, MURPHY, and McHUGH, Circuit Judges.

OPINION

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MURPHY, Circuit Judge.

I. INTRODUCTION

Is the citizenship of a trust determined by exclusive reference to the citizenship of its trustees? According to Carden v. Arkoma Associates, 494 U.S. 185, 110 S.Ct. 1015, 108 L.Ed.2d 157 (1990), the answer to this question is " no." The citizenship of a trust, just like the citizenship of all other artificial entities except corporations, is determined by examining the citizenship " of all the entity's members." Id. at 195. That being the case, the district court lacked subject matter jurisdiction over the suit underlying this appeal. This court remands the matter to the district court to vacate its judgment on the merits and remand the matter to state court.

II. BACKGROUND

Multiple plaintiffs, including ConAgra Foods, Inc. and Swift-Eckrich, Inc., brought suit in Kansas state court against Americold Logistics, LLC and Americold Realty Trust (the " Americold entities" ). The Americold entities removed the case to the United States District Court for the District of Kansas. As the basis for removal, the Americold entities asserted1 the parties were completely diverse.2 See 28 U.S.C. § 1441(b).

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No party challenged the propriety of removal; the district court did not address the issue. The merits of the suit were submitted to the district court on cross-motions for summary judgment. The district court granted summary judgment to the Americold entities. ConAgra and Swift-Eckrich brought a timely merits appeal.

After the parties filed their merits briefs, this court noted a potential jurisdiction defect in the notice of removal. See Qwest Corp. v. PUC of Colo.., 479 F.3d 1184, 1191 (10th Cir. 2007) (holding this court has " an independent duty to ensure that the district court[ ] properly asserted jurisdiction" (quotation omitted)). We ordered the Americold entities to file a supplemental brief addressing the following two questions:

1. Was the [Americold entities'] Notice of Removal sufficient to establish diversity jurisdiction in that the Notice did not establish the citizenship of the beneficial shareholders or beneficiaries of the Americold Realty Trust?

2. If the Notice of Removal did not establish diversity jurisdiction, what curative facts, if any, may the [Americold entities] aver to correct this defect in this appeal?

In their supplemental brief, the Americold entities assert the omission of the citizenship of the beneficiaries of Americold Realty Trust from the notice of removal is not a jurisdictional defect because a trust's citizenship is determined exclusively by the citizenship of its trustees. In support of this assertion, they rely on Navarro Savings Ass'n v. Lee, 446 U.S. 458, 100 S.Ct. 1779, 64 L.Ed.2d 425 (1980). They further assert that, although there is a split of authority on this issue, the approach they advocate is the majority position. Finally, they contend this court has, " on at least three occasions, indicated that under Navarro, where a trustee actively controls a trust, the trustee's citizenship controls for purposes of diversity." Appellees' Supplemental Br. at 3 (citing Ravenswood Inv. Co., L.P. v. Avalon Corr. Servs., 651 F.3d 1219, 1222 n.1 (10th Cir. 2011); Sola Salon Studios, Inc. v. Heller, 500 F.App'x 723, 728 n.2 (10th Cir. 2012) (unpublished); Lenon v. St. Paul Mercury Ins. Co., 136 F.3d 1365, 1371 (10th Cir. 1998)). ConAgra Foods and Swift-Eckrich concur in the analysis set out in the Americold entities' supplemental brief.

III. ANALYSIS

Because it is the lynchpin of the parties' arguments in favor of diversity jurisdiction, this court starts with the Supreme Court's decision in Navarro. In Navarro, trustees of a " business trust," suing in their own names, brought an action in federal district court for breach of contract. 446 U.S. at 459. The defendants disputed the existence of diversity jurisdiction, claiming the beneficiaries were the real parties to the controversy and the citizenship of the beneficiaries, from whom the defendants were not diverse, should control. Id. at 459-60. Navarro described the controlling question as follows: " [W]hether the trustees of a business trust may invoke the diversity jurisdiction of the federal courts on the basis of their own citizenship,

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rather than that of the trust's beneficial shareholders." Id. at 458.

To answer that question, the Court began by recognizing a long-established principle of diversity jurisdiction: " [T]he 'citizens' upon whose diversity a plaintiff grounds jurisdiction must be real and substantial parties to the controversy." Id. at 460. The Court also recognized that, with the exception of corporations, " only persons could be real parties to the controversy." Id. at 461. Thus, when persons composing an unincorporated association " sue in their collective name, they are the parties whose citizenship determines the diversity jurisdiction." Id. Nevertheless, the Court noted, Navarro did not involve a suit by an unincorporated association. Id. at 462. Because the suit...

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